Justia Insurance Law Opinion Summaries

Between 2007 and 2011, Michael Jensen sexually abused multiple children in Martinsburg, West Virginia. Jensen’s parents and grandfather held significant positions within the Church of Jesus Christ of Latter-Day Saints. Several of Jensen’s victims later sued the Church in West Virginia state court, alleging that the Church failed to take reasonable precautions to prevent Jensen’s abuse, including failing to report suspected abuse and failing to supervise or warn families about Jensen’s prior conduct. Before a verdict was reached, the Church settled with the remaining minor plaintiffs and their families.Following settlement, the Church sought coverage from two of its insurers, National Union Fire Insurance Company of Pittsburgh, PA, and ACE Property and Casualty Insurance Company, for defense and settlement costs. Both insurers refused to pay, prompting the Church to file suit in the United States District Court for the District of Utah, claiming breach of contract and breach of the implied covenant of good faith. The central issue became whether the underlying events constituted a single “occurrence” or multiple “occurrences” under the insurance policies, which would determine if the Church’s settlements met the policies’ retained limits required for coverage. The district court granted summary judgment to the insurers, holding that each instance of abuse was a separate occurrence and, therefore, the retained limits were not met for any single occurrence.The United States Court of Appeals for the Tenth Circuit reviewed the case and reversed the district court’s grant of summary judgment. The Tenth Circuit held that the insurance policies’ definitions of “occurrence” were ambiguous and that the Church’s interpretation—that its alleged negligence constituted a single occurrence—was reasonable. Under Utah law, ambiguities in insurance contracts must be construed in favor of coverage. The case was remanded for further proceedings consistent with this interpretation. View "Church of Jesus Christ of Latter-Day Saints v. National Union Fire Insurance Company of Pittsburg" on Justia Law

A dispute arose between former colleagues at an investment firm, resulting in costly litigation. Plaintiffs, representing one side of the conflict, alleged that three excess insurers improperly allowed their rivals to pursue insurance claims for litigation expenses that should have benefited plaintiffs. The insurance tower comprised a primary policy and several excess policies, each requiring exhaustion of underlying coverage before attachment. Plaintiffs claimed they had submitted invoices for covered losses but had not received reimbursement from any excess insurer. They sought damages and declaratory relief regarding coverage and liability under the excess policies, as well as claims for breach of the implied covenant of good faith and fair dealing.The San Francisco City and County Superior Court determined that plaintiffs had sufficiently alleged exhaustion of the primary insurance policy but not of the excess layers. As a result, claims against the first excess insurer proceeded, while demurrers by two higher-layer excess insurers were sustained. The California Court of Appeal affirmed the dismissal, reasoning that plaintiffs had not alleged an actual controversy regarding coverage for the higher excess policies because exhaustion had not occurred. The appellate court also found the absence of exhaustion fatal to plaintiffs’ claims for tortious breach of the implied covenant of good faith and fair dealing.The Supreme Court of California reviewed the case and held that plaintiffs may pursue claims for declaratory relief and tortious breach of the implied covenant of good faith and fair dealing against excess insurers even if all underlying insurance has not been exhausted. It is sufficient at the pleading stage to allege facts showing that coverage under an excess policy will attach and that insurer misconduct has impaired recovery. The Court reversed the judgment of the Court of Appeal and remanded for further proceedings. View "Fox Paine & Co, LLC v. Twin City Fire Ins Co" on Justia Law

The case centers on an insurance dispute involving the extent of uninsured or underinsured motorist (UIM) coverage in a personal liability umbrella policy. In 2000, the insured applied for a $1 million umbrella policy and expressly rejected UIM coverage by checking a waiver box and signing a statement indicating this rejection would apply to future renewals and replacement policies unless a written request was made to add coverage. In 2001, the insured increased the umbrella policy’s liability limit to $5 million but did not sign a new UIM waiver at that time. Over the following years, the policy was renewed annually, and changes were made to covered vehicles and drivers. In 2021, after the plaintiff was injured in an accident involving the insured’s covered vehicle, she sought UIM coverage from the umbrella policy, but the insurer denied the claim based on the original 2000 waiver.The Hillsborough-northern judicial district Superior Court granted summary judgment to the insurer, concluding that the initial UIM rejection applied to subsequent renewals and the increased liability limit, thus barring UIM coverage for the plaintiff. The plaintiff appealed, arguing that under the applicable version of RSA 264:15, I, the insured’s act of increasing the policy limits constituted a new “purchase” of insurance that triggered the statutory requirement for UIM coverage unless expressly waived at that time.The Supreme Court of New Hampshire reversed in part, holding that under the 1991 version of RSA 264:15, I, the increase of $4 million in umbrella coverage constituted a new purchase of insurance, requiring automatic UIM coverage absent a contemporaneous waiver. Because the insured did not execute a new waiver when increasing the limits, UIM coverage in that amount attached. However, the initial waiver remained effective for the original $1 million coverage. The case was remanded for entry of judgment consistent with this holding. View "Royce v. State Farm Fire & Cas. Co." on Justia Law

A minor was injured in a car accident while traveling from her father's home to school. Her parents had divorced and, according to a 2011 custody order, shared joint physical custody with an equal division of parenting time. However, in practice, the minor spent about 75% of her time at her mother’s home and 25% at her father’s. At the time of the accident, she was staying at her father's house. Multiple insurance companies insured her parents, and disputes arose regarding which insurer was responsible for personal protection insurance (PIP) benefits and the applicable liability coverage under her father’s insurance policy.The Oakland Circuit Court denied Esurance’s motion for summary disposition, which argued that the minor was domiciled with her mother and that Auto-Owners, her mother’s insurer, should be the highest priority insurer. The court instead granted Auto-Owners’ request for judgment, finding the minor was domiciled with her father based on the custody order and the Michigan Supreme Court’s prior decision in Grange Insurance Company of Michigan v Lawrence, which treated custody orders as determinative of domicile. The trial court also ruled that she was a resident of her father’s home for purposes of a step-down provision in his Esurance policy, limiting liability coverage. The Court of Appeals affirmed, holding that the minor was domiciled and resident at her father's home at the time of the accident.The Michigan Supreme Court reviewed the case and overruled the Grange domicile rule. The Court held that a custody order does not conclusively determine a child’s domicile for purposes of the no-fault act. Instead, the custody order serves as a starting point, but courts must review all facts and circumstances—including traditional domicile factors—to determine domicile. The Court vacated the Court of Appeals judgment regarding domicile and residency and remanded the case to the trial court. View "Frownfelter v. Esurance Property And Casualty Insurance Co." on Justia Law

A homeowner hired a general contractor to perform a remodeling project, which included electrical work provided by a subcontractor. During construction, a fire occurred at the home, allegedly due to improper electrical work by both the general contractor and the subcontractor. The homeowner’s insurer paid for the fire damage and, acting as subrogee, brought a negligence and breach of contract action against both contractors. After the fire, the homeowner discontinued the services of both contractors and later hired a new general contractor to complete the project.The Minnesota District Court granted summary judgment in favor of the contractors, dismissing the insurer’s claims as time-barred under the two-year statute of limitations for defective construction claims involving improvements to real property, as set out in Minn. Stat. § 541.051, subd. 1. The district court found that the statute of limitations began to run when the homeowner terminated the contract with the original general contractor, concluding that the action was not timely filed.On appeal, the Minnesota Court of Appeals reversed the district court's decision. The appellate court interpreted the statute to mean that the statute of limitations does not begin until the entire construction project is terminated, substantially completed, or abandoned, not merely upon termination of the contract with the general contractor.The Supreme Court of Minnesota reviewed the case to resolve the statutory interpretation issue. The court held that, for purposes of the statute of limitations under Minn. Stat. § 541.051, subd. 1, the termination of the contract with the general contractor constitutes “termination … of the construction or the improvement to real property.” As a result, the Supreme Court reversed the Court of Appeals and reinstated the district court’s dismissal of the insurer’s claims as time-barred. View "American Family Insurance Company vs. NB Electric, Inc." on Justia Law

A church with property insurance sustained windstorm damage and submitted a claim to its insurer. When the parties could not agree on the amount of loss, the church invoked the insurance policy’s binding appraisal process. Each party selected an appraiser, and the appraisers agreed on an award, which the insurer paid and the church accepted. Afterward, the church alleged it discovered additional, previously hidden damages, and the insurer refused to pay more than the appraisal award. The church then sued, claiming breach of contract and seeking to set aside the binding appraisal based on the later-discovered damage.The Franklin County Court of Common Pleas granted judgment on the pleadings to the insurer, finding that the appraisal award was binding and there was no evidence of fraud, misfeasance, or mistake to justify reopening the award. The Tenth District Court of Appeals reversed, holding that the church’s complaint pleaded mistake with sufficient particularity to satisfy Ohio’s Civil Rule 9(B), which requires that mistake be pled with particularity.The Supreme Court of Ohio reviewed the case and held that a binding appraisal award may only be set aside for fraud or manifest mistake, defined as an egregious error undermining the intent of the agreement, not a mere error in judgment. The court further concluded that, to plead mistake with particularity under Civil Rule 9(B), the facts alleged must satisfy the elements of mistake. Since the church only alleged that additional, hidden damages were discovered after the appraisal, and did not plead facts constituting a manifest mistake by the appraisers, the complaint did not state a claim for mistake. The Supreme Court of Ohio reversed the Tenth District’s judgment and reinstated the trial court’s dismissal of the complaint. View "One Church v. Bhd. Mut. Ins. Co." on Justia Law

In early 2021, the owner of a rental property discovered water damage and mold in his garage, caused by a leaking water heater. He reported the loss to his property insurer, which investigated and initially denied coverage for mold and wear-and-tear damage but issued a partial payment for covered water damage. The insurer closed the claim, explicitly stating that the claim would not be reopened unless the company notified the insured in writing. Over the next two years, the property owner intermittently submitted additional estimates and information, but the insurer maintained its denial of further coverage and repeatedly referenced the policy’s one-year limitations period for filing suit.The property owner eventually filed suit in January 2023, asserting claims for breach of contract, bad faith, misrepresentation, fraud, and unfair competition, seeking damages for repair costs and loss of use. The Superior Court of Alameda County granted summary judgment for the insurer, finding the suit time-barred by the policy’s one-year limitations clause. The court rejected the plaintiff’s arguments that the denial was not unequivocal, that equitable tolling or estoppel applied, and that the limitations period was extended by the state of emergency related to COVID-19.On appeal, the Court of Appeal of the State of California, First Appellate District, Division Two, affirmed the trial court’s judgment. The appellate court held that the insurer’s written communications constituted unequivocal denials, starting the one-year limitations period when the partial payment was made and the claim was closed. The court found no basis for equitable tolling, estoppel, or a longer limitations period due to the COVID-19 state of emergency, and determined that all causes of action arose under the policy and were subject to the one-year period. The judgment in favor of the insurer was affirmed. View "Kumar v. Mid-Century Insurance Co." on Justia Law

A surgery center performed a liposuction procedure on April Jenkins, who died during the operation. Her father, Hal Jenkins, engaged in negotiations with the center’s insurer, Prime Insurance Company, regarding liability. The policy had a $50,000 per occurrence limit, which decreased as Prime Insurance paid defense costs. After months of negotiations, Hal Jenkins sued the surgery center, CLJ Healthcare, LLC, and Prime Insurance offered the remaining policy limit. Jenkins rejected the offer. Subsequently, Jenkins learned of a separate $2 million policy through another insurer, Owners Insurance Company, and demanded payment from both insurers. Owners Insurance denied coverage. Jenkins and CLJ Healthcare entered into an agreement where Jenkins would receive an assignment of CLJ’s potential bad faith claim against Prime Insurance and CLJ would not defend itself in Jenkins’s malpractice suit. Jenkins then obtained an uncontested $60 million judgment against CLJ.Jenkins and CLJ sued Prime Insurance in the United States District Court for the District of Utah, alleging bad faith. The district court initially found the claim time-barred, but the United States Court of Appeals for the Tenth Circuit reversed, finding the claim timely and remanded the case. On remand, the district court granted summary judgment for Prime Insurance, concluding the evidence did not show bad faith.The United States Court of Appeals for the Tenth Circuit reviewed the case de novo and affirmed the district court’s summary judgment. The court held that, under Utah law, an insurer generally has no duty to explain policy terms absent ambiguity or fraud, and Prime Insurance’s actions—including offering the policy limit and communicating with the insured—did not constitute bad faith. The Tenth Circuit concluded that Jenkins and CLJ had not provided evidence sufficient to support a claim of bad faith against Prime Insurance. View "Jenkins v. Prime Insurance" on Justia Law

Several individuals who, as minors, alleged they were victims of sex trafficking at hotels in Philadelphia, including the Roosevelt Inn, filed civil lawsuits against various hotel operators and managers (the Policyholders). The plaintiffs claimed that the Policyholders were negligent in failing to prevent sex trafficking on their premises. At the time of these alleged incidents, the Policyholders had commercial general liability insurance from multiple insurers, including Samsung Fire & Marine Insurance Company, Harleysville, Nationwide, and Ace Property & Casualty Insurance Company. The insurers initially provided a defense subject to reservations of rights.Samsung sought a declaratory judgment from the United States District Court for the Eastern District of Pennsylvania, arguing it had no duty to defend or indemnify the Policyholders, principally on public policy grounds, asserting that coverage should not extend to alleged violations of the Pennsylvania Human Trafficking Law. Policyholders counterclaimed, seeking declarations that coverage was owed. After bankruptcy proceedings involving some Policyholders, the District Court granted judgment for the insurers, focusing solely on public policy and holding that Pennsylvania’s strong policy against sex trafficking precluded both defense and indemnification obligations.The Policyholders appealed to the United States Court of Appeals for the Third Circuit, which then certified questions of Pennsylvania law to the Supreme Court of Pennsylvania. The Supreme Court of Pennsylvania was asked to determine whether an insurer’s duty to defend or indemnify is abrogated on public policy grounds when an insured is alleged to have enabled or profited from sex trafficking.The Supreme Court of Pennsylvania held that neither the duty to defend nor the duty to indemnify is abrogated by public policy under these circumstances. The Court reasoned that while Pennsylvania criminalizes sex trafficking, this does not justify judicially creating an exception to insurance coverage where the policy is silent. The Court returned the matter to the Third Circuit without addressing the second certified question. View "Samsung v. RI Settlement" on Justia Law

Omega Restaurant & Bar, LLC operated a nightclub in Virginia Beach and used images of professional models in its online advertising without their consent. The models sued Omega in Virginia state court, alleging misappropriation of their likenesses and damage to their professional reputations. After the models amended their complaint, Omega removed the lawsuit to federal court and sought defense and indemnification from its commercial insurer, Covington Specialty Insurance Company, pursuant to its policy. Covington initially agreed to defend Omega under a reservation of rights, but then filed a lawsuit in federal court seeking a declaration that it had no duty to defend or indemnify Omega for the models’ claims.The United States District Court for the Eastern District of Virginia heard Covington’s declaratory relief action. In March 2022, Omega and the models settled the underlying lawsuit, entering a consent judgment, which included dismissal of the models’ claims with prejudice and assignment of Omega’s rights under the insurance policy to the models. The district court, apparently unaware of this settlement, proceeded to grant summary judgment in favor of Covington in March 2023, holding that the insurance policy did not cover the models’ claims and Covington owed no duty to defend or indemnify Omega. Omega’s subsequent motion to alter or amend the judgment was denied, and Omega appealed.The United States Court of Appeals for the Fourth Circuit reviewed the case. On appeal, Covington argued for the first time that the declaratory relief action was moot due to the settlement and consent judgment in the underlying lawsuit. Because the mootness issue had not been addressed by the district court, the Fourth Circuit remanded the case to the district court to determine whether a live case or controversy remains under Article III. The Fourth Circuit did not reach the merits of Omega’s appeal. View "Covington Specialty Insurance Company v. Omega Restaurant & Bar, LLC" on Justia Law